14 March 2023
If you are covering the latest US inflation data, please find below a comment from Richard Carter, head of fixed interest research at Quilter Cheviot:
“US inflation continues to fall and suggests the actions by the Federal Reserve are doing their job in bringing it down, while not tipping the economy into recession. However, core inflation continues to be troublesome and stickier than many would like, leaving further rate hikes on the table. Inflation will continue to be key driver of decision making for the Fed, but events of recent days are beginning to weigh on market sentiment, and there are risks that under the bonnet, the US economy is under strain. The Fed will be delighted, however, that there are no gremlins in this inflation report and should help to calm things following a very uncertain past week.
“With the Silicon Valley Bank fallout still fresh, and inflation taking the predicted route, a 25 basis points rise in rates appears the most likely scenario for the Fed at its next meeting. This battle against inflation is going to persist for some time, and Jerome Powell has made it clear that he will act strongly if necessary. For now, though, this option will likely to be kept back and used if things turn materially worse from here.”
